Steak ‘n Shake wants to sell all of its company stores

Steak ‘n Shake, eager to shift more of its restaurants to franchise ownership, is now selling partnerships in all of its more than 400 company-owned restaurants for an initial investment of $10,000.

That’s a fraction of the typical investment for a Steak ‘n Shake restaurant. Initial investment on a “classic format” Steak ‘n Shake ranges from $1.6 million to $2.6 million, according to the company’s franchise disclosure documents.

Qualified operators would have to complete an extensive six-month training program and would pay the $10,000 to buy into the partnership. They would then be single-unit owner-operators.

A spokesperson for Steak ‘n Shake said that the plan is to convert all of the company’s corporate locations into these franchise partnerships.

The franchise partner would get 50% of the restaurant’s profits. The company did not answer questions as to who would be responsible for the costs associated with building and site improvements.

“I started my company with $15,000 and built a thriving enterprise,” Sardar Biglari, CEO of Steak ‘n Shake owner Biglari Holdings, said in a statement. “I want to provide an opportunity to other entrepreneurs who are highly motivated to excel but lack the financial means.”

“What will be important to become a franchisee is not great capital but great ability,” he added. “We are seeking to harness the power of entrepreneurs and to create a company of owners.”

Biglari has wanted to shift the largely company-run Steak ‘n Shake into more of a franchise business for years. The company owns and operates roughly two-thirds of the company’s more than 600 locations.

“Our prospects in franchise operations—domestic and international—look bright,” Biglari wrote earlier this year in his annual letter to shareholders.

But franchisees would be buying into a brand that has struggled as of late. The chain’s same-store sales declined 3.4% in the quarter ended June 30, including a 6.4% decline in traffic. That came after a tough 2017 that Biglari called “not a very good year” and “lugubrious” in his letter.

A number of restaurant brands sell partnerships to owner-operators who then share in the profits. The most notable example is Atlanta-based chicken chain Chick-fil-A.

UPDATE: This story has been updated to include details of the partnerships.

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